http://www.thedailystar.net/newDesign/news-details.php?nid=132478
Higher GDP, low inflation on target
Rejaul Karim Byron
As investment rebounds, higher GDP growth and a low inflation rate for the next fiscal year is the target to be set by the government.
According to the preliminary projection, 6.7 percent growth in gross domestic product and 6.1 percent inflation on an average are targeted for FY 2010-11.
Meanwhile, development partners forecast the GDP growth for the current fiscal at not-over 5-5.5 percent, while the government expects such growth at 6 percent and inflation 6.5 percent.
The finance ministry officials said the resources committee meeting decided Sunday that the FY 2010-11 GDP and inflation growth rates would soon be set after a consultation with the central bank.
Pointing to a better investment scenario now, a high official hinted at a larger annual development programme for the fiscal to come. “Around Tk 40,000 crore is likely to be earmarked for ADP, while the size of the total budget will be around Tk 1,32,000 crore,” he said.
A bigger public expenditure would help grow GDP, the finance ministry official pointed out. He however linked the inflation control to low prices of petroleum and food on international market.
A Bangladesh Bank official is also upbeat on reaching the target of a higher GDP growth, pointing his finger at the rise in industrial credit and imports of capital machinery and raw materials.
Also, export orders of the main foreign exchange earner readymade garment are picking up.
BB statistics show that disbursement of industrial term loan increased by 41 percent to Tk 12,615 crore during the July-December period of this fiscal year.
Such loan disbursement marked a 7.5 percent negative growth in the same period a year earlier.
The higher inter-bank call money rate also points to the increasing investment demand. The average call money rate was 3.45 percent on March 16, up from around 1.0 percent in June last year.
Although investment rebounded, the inflation rate is on the rise. According to the Bangladesh Bureau of Statistics, inflation went up by 8.99 percent on point-to-point basis in January.
A BB official said if the local food production (including rice) is not hampered and the supply chain goes smooth, inflation could be contained at the targeted level.
He also listed some central bank measures, which include adoption of a cautious and accommodative monetary policy.
